Market fails to capitalize on better-than-expected January IIP numbers

Key benchmark -- Nifty -- added another half a percent gains on Monday but, closed off the day’s high after higher than expected growth in January industrial output reduced hopes for a possible rate cut later this week by RBI. Globally, Asian equities fell on Monday after Chinese trade figures underlined a slowdown in the world’s No. 2 economy. Moreover, Greece also remained on the investors’ radar after the International Swaps and Derivatives Association declared on Friday said that a ‘credit event’ -- essentially a default -- occurred in Greece’s debt, which will likely to trigger a net $3.2 billion in payouts between buyers and sellers of credit default swaps on Greek sovereign credit. Back home, banking shares rallied on the bourses after a higher than expected cut in the cash reserve ratio by the Reserve Bank of India (RBI).

Initially, the market pared gains after a firm start triggered by the RBI’s announcement, post market hours on March 9, 2012, of a reduction in cash reserve ratio (CRR) of banks by 75 basis points to ease liquidity situation in the banking system. Afterwards, the index came off lows in morning trade as sentiment was supported by railway stocks which moved higher during the morning session on hopes of positive changes in the upcoming Railway Budget 2012. But, in the late morning trade market witnessed a steep fall of about 50 points and touched the negative terrain for a while as chances of repo rate cut went down after strong January IIP. Meanwhile, IIP numbers for the month of January rose to 6.8 percent against 1.8 percent in December. The cumulative growth for the period April-January 2011-12 stands at 4.0 percent over the corresponding period of the previous year, the government data showed. The capital goods sector registered a contraction of just -1.5 percent in January compared with a contraction of -16.3 percent in December. Key benchmark regained positive zone after slipping into the red in late-morning trade as sentiments got support from India’s President Pratibha Patil comments on Indian economy which she said will slow down to 7 percent this fiscal from 8.4 percent last fiscal but soon revert to the 8-9 percent growth trajectory on the back of strong fundamentals and favorable domestic factors. Meanwhile, radio stocks like ENIL and Reliance Broadcast surged after President Pratibha Patil said that the government will e-auction 839 FM radio channels in 245 cities. In the final hour of trade, market captured some more gains and finally, Nifty negotiated a close of over 5,350 mark with a gain of about half a percent.

Meanwhile, most of the sectoral indices on the NSE were settled in the green, CNX PSU Bank remained the major gainer, up 2.67% followed by CNX Infra up 1.50% and CNX Energy up by 1.15% while CNX IT and CNX Media declined 1.00% each in the trade. The India Volatility Index (VIX), a gauge for market’s short term expectation of volatility, surged 3.14% and reached 26.27.

The India VIX witnessed an addition of 3.14% at 26.27 as compared to its previous close of at 26.33 on Friday.

The 50-share S&P CNX Nifty gain 26.00 points or 0.49% to settle at 5359.55Nifty March 2012 futures closed at 5,388.75 at a premium of 29.20 points over spot closing of 5,359.55, while Nifty April 2012 futures were at 5,428.75 at a premium of 69.20 points over spot closing. The near month March 2012 derivatives contract expires on Thursday, March 29, 2012. Nifty March futures saw contraction of 0.29 million (mn) units taking the total outstanding open interest (OI) to 24.98 mn units.

From the most active contract, Tata Motors March 2012 futures were at a discount of 1.40 point at 284.15 compared with spot closing of 285.55. The number of contracts traded was 10,957.

DLF March 2012 futures were at a premium of 1.60 point at 205.35 compared with spot closing of 203.75. The number of contracts traded was 13,438.

HDIL March 2012 futures were at a premium of 0.60 at 110.10 compared with spot closing of 109.50. The number of contracts traded was 15,431.

Tata Steel March 2012 futures were at a premium of 2.40 point at 457.10 compared with spot closing of 454.70. The number of contracts traded was 15,305.

RIL March 2012 futures were at a premium of 6.75 point at 803.75 compared with spot closing of 797.00. The number of contracts traded was 18,045. Among Nifty calls, 5600 SP from the March month expiry was the most active call with an addition of 0.08 million open interest.

Among Nifty puts, 5200 SP from the March month expiry was the most active put with an addition of 0.29 million open interest.

The maximum OI outstanding for Calls was at 5600 SP (5.24mn) and that for Puts was at 5200 SP (7.54mn).

The respective Support and Resistance levels are: Resistance 5411.86-- Pivot Point 5369.58 -- Support 5317.26.

The Nifty Put Call Ratio (PCR) OI wise stood at 1.14 for March -month contract.

The top five scrips with highest PCR on OI were JP POWER 4.50, DR REDDY 3.18, SIEMENS 2.11, SCI 1.95 and MARUTI 1.51

Among most active underlying, Suzlon witnessed contraction of 1.02 million of Open Interest in the March month futures contract followed by IFCI which witnessed contraction of 0.87 million of Open Interest in the near month contract. Meanwhile, LITL witnessed contraction of 2.19 million in the March month futures. Also, GVKPIL witnessed contraction of 1.51 million in Open Interest in the March month contract. Finally, RCOM witnessed contraction of 0.58 million of Open Interest in the near month futures contract.